Saudi Arabia plans to create an $80-billion investment fund to help develop the megaproject NEOM for a clean-energy living area in the northwest of the country, Saudi Crown Prince Mohammed bin Salman said on Monday.
The futuristic NEOM project, a key pillar of Saudi Arabia's Vision 2030 program to boost its economy and diversify it away from oil, will initially have $80 billion (300 billion Saudi riyals) in the Neom Investment Fund, the Crown Prince said at an event in Jeddah, as carried by Bloomberg. Mohammed bin Salman is chairman of the NEOM Board of Directors and has been dreaming of the project for half a decade. The fund could increase to $106 billion (400 billion riyals), the crown prince said.
The Saudi state will fund most of the projects within NEOM, which is itself one of the most complex construction projects in the world.
The first phase of the NEOM construction will receive nearly $160 billion (600 billion riyals) from the Saudi sovereign wealth fund, plus another "government subsidy" of up to $80 billion, according to the Saudi Crown Prince.
Saudi Arabia also plans an initial public offering (IPO) for NEOM for 2024 to finance part of the enormous costs for building a mega clean-energy city on a plot of land the size of Belgium.
The Crown Prince hopes that NEOM will eventually become self-sufficient and have a 13% to 14% return on investment, Bloomberg reports.
On Monday, the prince revealed the design for THE LINE, the futuristic city with no roads, cars, or emissions, which will run on 100% renewable energy, and 95% of the land will be preserved for nature.
"The designs revealed today for the city's vertically layered communities will challenge the traditional flat, horizontal cities and create a model for nature preservation and enhanced human livability. THE LINE will tackle the challenges facing humanity in urban life today and will shine a light on alternative ways to live," the prince said as carried by the Saudi Press Agency.
It remains to be seen how much the NEOM construction will cost and how Saudi Arabia will pay for it.
By Charles Kennedy for Oilprice.com
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